LVMH and their strategy for the future of fashion

This article was written in collaboration with Jing Hu, my coursemate, my friend <3

Recently, the announcement of Pharrell Williams being appointed creative director of Louis Vuitton Menswear caused widespread surprise and the stock price of parent company LVMH to increase immediately. This move comes two years after the shocking news of the passing of Virgil Abloh, the previous creative director. The strategy LVMH is using to further strengthen their position as the business behind the best luxury brands in the world is becoming clearer. Although others who had more extensive experience in designing and the craftsmanship that creating collections is often associated with, it seems that Louis Vuitton wanted to make sure the next person appointed is able to match the new culture created and legacy set by Abloh, therefore continuing their focused targeting of specific consumer communities. On the other hand, the womenswear department has had Nicholas Ghesquière as their creative director since 2013, perhaps indicating that whilst they continue to promote their identity as couturiers, the menswear department has more room to play with experimentation.

This move is part of a wider strategy which can be seen in various examples from LVMH in the past few years. In early 2021, LVMH completed the acquisition of Tiffany & Co. adding to their portfolio of jewellery brands. In the two years since, Tiffany & Co. have collaborated with Supreme (a famous streetwear brand), launched an internet-breaking campaign with the Carters (not only did Beyoncé star in the campaign with her husband Jay-Z, but she also performed her rendition of the song Moon River, famously performed by Audrey Hepburn in the cult-classic film, Breakfast at Tiffany’s) and most recently, they collaborated again with Nike to release an Air Force 1 in the classic Tiffany blue. This is a deviation from Tiffany’s previous strategy where their target markets were originally husbands or courters of women wanting a little blue box (containing engagement rings or other things). Now it could be argued that Tiffany’s is targeting a younger demographic of consumers who like to mix wearing luxury with streetwear. This may represent the wish of LVMH to maintain its DNA of luxury heritage whilst also expanding their appeal in order to stay relevant for years to come.

Additionally, LVMH have other strategies to achieve the same goal. The LVMH Prize Fund is a competition for emerging designers to gain monetary support from the conglomerate and also enjoy a year of mentorship. This scheme helps LVMH display their benevolence, and by supporting the future of fashion, LVMH can keep good connections with these up-and-comers, who may be able to define new communities of consumers in the fashion industry who also represent a new culture. Jacquemus is perhaps the most famous recipient of the LVMH Prize and members of the Arnault family continue to attend Jacquemus’ shows and remain friends of the house. It will be interesting to see in the next few years how LVMH foster this relationship and if they make a move to acquire Jacquemus in the future.

The final strategy that we have been able to determine, is that of LVMH parenting a new company from its inception to its success, namely Fenty Beauty by Rihanna. The beauty brand represents a diverse and inclusive, well-looked after community of beauty-lovers who can achieve a perfected look and express their personal creativity. The ready-to-wear brand of the same name closed operations after only two years, perhaps because the target market of the brand could not be the same as Fenty Beauty - clothing prices were much higher, in line with other luxury ready-to-wear brands and did not enjoy the same success other brands, who have a strong heritage and DNA, are able to.

These various strategies prove how LVMH is trying to generate trust in a budding community. Whereas in the nineties, fashion brands famously tried to separate themselves from hip-hop culture, now, after the widespread uproar against discriminatory, exclusive treatment in 2020, brands are changing direction. This is all part of an effort to increase social capital.

Social capital as defined by Guiso, Sapienza & Zingales in their 2007 paper titled Social Capital as Good Culture is the “set of beliefs and values that foster cooperation”. In this paper, the authors argue that beliefs within culture occur because they are passed down from generation to generation. They also posit that this dependence on beliefs is related to the original country environment that any given person has grown up in. They prove their hypothesis by examining the difference between trust levels in two different regions in Italy and comparing the similarity to the trust levels written about by authors from these respective places more than a century ago. From this article, we can see that trust is a major part of culture, varying from region to region within countries and across countries.

In the past, culture was reflected by the artworks and literatures written at the time. Now, culture is reflected also by the collections and campaigns of big brands. For LVMH to continue to succeed in the future, they need to carry on creating a culture of trust in their consumers, so that they and future generations feel positive and open when considering new collections, ideas and feeling inspired to buy. Not all people will ever have enough disposable income to be repeat customers of luxury brands, especially those prestigious brands parented by LVMH. However, LVMH’s goal to have their portfolio known globally and within communities as the most trustworthy, culturally relevant and interesting, is important for them to continue to establish a monopoly in the minds of consumers, whether those consumers are merely viewing content on social media, buying digital content on Web3 platforms, or buying material products.

Photo Credits: BBC News, LVMH, Elle and LIONELDELUY2016